Callaway Golf Company (ELY, Financial) filed Quarterly Report for the period ended 2009-06-30.
Callaway Golf Company is designs develops manufactures and markets high quality innovative golf clubs. The Company\'s golf clubs are sold at premium prices to both average and skilled golfers on the basis of performance ease of use and appearance. Callaway Golf Company has a market cap of $425.4 million; its shares were traded at around $6.6 with and P/S ratio of 0.4. The dividend yield of Callaway Golf Company stocks is 0.6%.
Selling expenses decreased $8.1 million (10%) to $72.4 million in the second quarter of 2009 compared to $80.5 million in the comparable period of 2008. As a percentage of net sales, selling expenses increased to 24% in the second quarter of 2009 compared to 22% in the second quarter of 2008. The dollar decrease in selling expenses was primarily due to cost reductions taken by the Company during the second quarter of 2009, which included decreases of $4.0 million in advertising and promotional activities, $1.1 million in employee costs and $1.2 million in travel and entertainment. In addition, employee incentive compensation expense decreased by $1.4 million.
General and administrative expenses decreased $3.4 million (15%) to $19.4 million in the second quarter of 2009 compared to $22.8 million in the comparable period of 2008. As a percentage of net sales, general and administrative expenses remained consistent at 6% in the second quarter of 2009 and 2008. The dollar decrease was primarily due to a decrease of $1.1 million in employee incentive compensation expense and $0.9 million in bad debt expense in addition to cost reductions taken by the Company during the second quarter of 2009, including a $0.9 million in employee costs.
Net income for the second quarter of 2009 decreased to $6.9 million from net income of $37.1 million in the comparable period of 2008. Diluted earnings per share declined to $0.10 per share in the second quarter of 2009 compared to $0.58 per share in the second quarter of 2008. Net income and earnings per share for the three months ended June 30, 2009 and 2008 were negatively affected by after-tax charges of $1.1 million ($0.02 per share) and $3.0 million ($0.05 per share), respectively, as a result of costs incurred in connection with the Companys gross margin initiatives. In addition, net income and earnings per share were negatively affected by after-tax charges of $1.7 million ($0.03 per share) incurred during the second quarter of 2009 as a result of the workforce reductions announced in April 2009.
The Company has continued to actively implement the gross margin improvement initiatives, which were announced during the fourth quarter of 2006. As a result of these initiatives, the Companys golf clubs and golf balls operating segments absorbed pre-tax charges of $1.4 million and $0.4 million, respectively, during the second quarter of 2009 and $1.4 million and $3.4 million, respectively, during the comparable period in 2008. In addition, in connection with the workforce reductions announced in April 2009, the Company recorded pre-tax charges of $2.8 million, of which $2.2 million and $0.6 million were absorbed by the Companys golf clubs and golf balls operating segments, respectively, during the three months ended June 30, 2009.
As a result of the weak global economy and its continued adverse effects on the golf industry in general, in addition to unfavorable foreign currency exchange rates, net sales decreased $158.4 million (22%) to $574.1 million for the six months ended June 30, 2009 compared to a record $732.5 million for the comparable period in the prior year. This decrease reflects a $131.3 million decline in net sales of the Companys golf clubs segment and a $27.1 million decline in net sales of the Companys golf balls segment as indicated below (dollars in millions):
Read the The complete ReportELY is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
Callaway Golf Company is designs develops manufactures and markets high quality innovative golf clubs. The Company\'s golf clubs are sold at premium prices to both average and skilled golfers on the basis of performance ease of use and appearance. Callaway Golf Company has a market cap of $425.4 million; its shares were traded at around $6.6 with and P/S ratio of 0.4. The dividend yield of Callaway Golf Company stocks is 0.6%.
Highlight of Business Operations:
For the second quarter of 2009, gross profit decreased $61.3 million to $109.8 million from $171.1 million in the second quarter of 2008. Gross profit as a percentage of net sales (gross margin) decreased to 36% in the second quarter of 2009 compared to 47% in the second quarter of 2008. This decline in gross margin is primarily attributable to the unfavorable economic conditions and the resulting reduction in sales volume as well as the impact of unfavorable changes in foreign currency rates. In addition, gross margin was negatively affected by sales promotions, price reductions, and a shift in product mix to lower priced, lower margin golf products during the second quarter of 2009 compared to the second quarter of 2008. This decline in gross margin was partially offset by cost reductions on golf club component costs combined with more cost efficient golf club designs, as well as an overall improvement in manufacturing efficiencies as a result of the Companys gross margin improvement initiatives. See Segment Profitability below for further discussion of gross margins. Gross profit for the second quarter of 2009 was negatively affected by charges of $1.8 million related to the Companys gross margin improvement initiatives compared to $4.7 million for the comparable period in 2008, as well as $1.1 million in charges recognized in connection with the work force reductions announced in April 2009.Selling expenses decreased $8.1 million (10%) to $72.4 million in the second quarter of 2009 compared to $80.5 million in the comparable period of 2008. As a percentage of net sales, selling expenses increased to 24% in the second quarter of 2009 compared to 22% in the second quarter of 2008. The dollar decrease in selling expenses was primarily due to cost reductions taken by the Company during the second quarter of 2009, which included decreases of $4.0 million in advertising and promotional activities, $1.1 million in employee costs and $1.2 million in travel and entertainment. In addition, employee incentive compensation expense decreased by $1.4 million.
General and administrative expenses decreased $3.4 million (15%) to $19.4 million in the second quarter of 2009 compared to $22.8 million in the comparable period of 2008. As a percentage of net sales, general and administrative expenses remained consistent at 6% in the second quarter of 2009 and 2008. The dollar decrease was primarily due to a decrease of $1.1 million in employee incentive compensation expense and $0.9 million in bad debt expense in addition to cost reductions taken by the Company during the second quarter of 2009, including a $0.9 million in employee costs.
Net income for the second quarter of 2009 decreased to $6.9 million from net income of $37.1 million in the comparable period of 2008. Diluted earnings per share declined to $0.10 per share in the second quarter of 2009 compared to $0.58 per share in the second quarter of 2008. Net income and earnings per share for the three months ended June 30, 2009 and 2008 were negatively affected by after-tax charges of $1.1 million ($0.02 per share) and $3.0 million ($0.05 per share), respectively, as a result of costs incurred in connection with the Companys gross margin initiatives. In addition, net income and earnings per share were negatively affected by after-tax charges of $1.7 million ($0.03 per share) incurred during the second quarter of 2009 as a result of the workforce reductions announced in April 2009.
The Company has continued to actively implement the gross margin improvement initiatives, which were announced during the fourth quarter of 2006. As a result of these initiatives, the Companys golf clubs and golf balls operating segments absorbed pre-tax charges of $1.4 million and $0.4 million, respectively, during the second quarter of 2009 and $1.4 million and $3.4 million, respectively, during the comparable period in 2008. In addition, in connection with the workforce reductions announced in April 2009, the Company recorded pre-tax charges of $2.8 million, of which $2.2 million and $0.6 million were absorbed by the Companys golf clubs and golf balls operating segments, respectively, during the three months ended June 30, 2009.
As a result of the weak global economy and its continued adverse effects on the golf industry in general, in addition to unfavorable foreign currency exchange rates, net sales decreased $158.4 million (22%) to $574.1 million for the six months ended June 30, 2009 compared to a record $732.5 million for the comparable period in the prior year. This decrease reflects a $131.3 million decline in net sales of the Companys golf clubs segment and a $27.1 million decline in net sales of the Companys golf balls segment as indicated below (dollars in millions):
Read the The complete ReportELY is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
